The money you work hard to set aside in your deposit account today may not have the same value tomorrow. While interest on your savings helps to grow your money, inflation has been even higher, which means your money is losing its value. Here’s how you can change that.
Your money grows through the compounding interest earned on it, but inflation erodes its real value, hence decreasing your purchasing power. Inflation rates have consistently remained above interest rates, creating a pressing need for better alternatives.
You do need an easily accessible pool of money in case of emergencies and deposit accounts can be a good way to achieve that. But once you have 6-12 months of living expenses available, it’s time to look for additional options to grow your money.
You can take advantage of a range of financial products to mitigate risk and help grow your excess money at a faster rate. By investing over a long term, you can also benefit from dollar cost averaging to protect yourself against market volatilities.
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